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tv   Nightly Business Report  PBS  April 17, 2012 4:30pm-5:00pm PDT

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>> tom: technology drove wall street higher today. after the bell, ibm, yahoo, and intel all report with strong earnings. >> susie: and after days of selling, apple shares come roaring back. but some analysts are still cautious. >> there's zero historical precedent for this company to hit a trillion dollar valuation mark, right? it doesn't mean that it can't >> susie: it's "nightly business report" for tuesday, april 17. is is "nightly business report" with susie gharib and tom hudson.is made possibl:
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captioning sponsored by wpbt >> susie: good evening, everyone. "technology" was the word of the day on wall street. intel, yahoo and ibm reported solid quarterly earnings after the market closed. but apple was the sweetest stock of the day, and tom, that helped ignite a powerful rally in the major averages. >> tom: susie, it was the best day for those indices in more than a month. the dow surged almost 200 points, the nasdaq added 54, and the s&p was up 21. after the bell, a flurry of earnings reports.
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yahoo first quarter profits jumped 28%. it earned 23 cents a share, six cents higher than analysts' estimates. revenues also came in better than expected, and the stock rose more than 2% in after-hours trading. ibm saw its first quarter profits grow, up 8% from a year ago and well over wall street estimates. but big blue has disappointing revenues. still, the company's new c.e.o. raised ibm's full-year profit forecast. and intel's earnings came in at 53 cents a share, down slightly from last year and three cents better than expected. >> susie: meanwhile, apple shares surged 5% today as investors had second thoughts about the recent selloff. suzanne pratreports. >> reporter: at this manhattan apple store, it was business as usual today. that means busy, busy, and no sign of the recent sour feelings that investors had for apple stock.
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those investors are clearly fickle, as the shares today regained more than half of the shine they gave up in the last week. today's buying came after a number of analysts issued bullish notes on the maker of iphones and ipads. and many wall street firms still have price targets for apple at or above the $700 mark. analyst colin gillis, however, is cautious on the shares, which he rates a "hold." >> this is the stock that's been the number one stock held in hedge funds right now, and that's going to create some volatility. these hedge funds tend to come in fast and sell even faster. if there's any hiccup in the numbers, look for some selling pressure and for the stock to retrace. >> reporter: and the stock has ample ground to retrace-- the shares have surged 80% in the last year, and its market capitalization makes it the world's most valuable company. still, even apple lovers concede the shares, particularly at lofty levels, are vulnerable. and some analysts say
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competitors know apple is most vulnerable on pricing. after all, not everyone can pay $600 for a new iphone. others worry the bar is set too high for apple and its innovations. they wonder whether the company can keep coming up with juicy new products. >> that's a lot of pressure on the company to deliver yet another revolution after an ipod, an ipad, an iphone. so the next feat will be tough, and we're not sure it happens this year. >> reporter: here's one more thing for investors to think about-- apple releases its quarterly earnings a week from today. analysts say the company needs to show it sold 35 million iphones and 14 million ipads to makeall stre happy. suzanne pratt, "nightly business report," new york. >> tom: apple's volatility over the week is a reminder of just how big the company has gotten, and how influential it can be for any stock index that includes apple shares. as the biggest publicly traded
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company, at over $500 billion, it represents the biggest share- - more than 4%-- of the s&p 500, since the index uses market value to determine importance. the bigger the market value, the more impact a stock can have on the overall index. think of it li this-- of the enre s&p00 rallyo far th year, 15% of that entire rally is thanks to just one stock, apple. >> there's enormous amounts of money. $27 billion was created in market value today. $190 billion they created year to date. its not just the size but the volatility. >> tom: despite apple's size, it isn't the most influential stock ever in the index. that was ibm back in the early '90s. >> susie: still ahead-- with pump prices around $4 a gallon nationwide, president obama calls for a crackdown on illegal speculation in the oil market. >> tom: the international
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monetary fund is kind of like the world's financial fire brigade, rushing in wherever economic disaster threatens. today, i.m.f. economists warned there is more danger ahead. in it's latest world economic outlook, the group warns of big risks to the fragile global economic recovery. darren gersh reports. >> reporter: i.m.f. officials say the world economy is calmer now, but it's an uneasy calm. >> one has the feeling that, at any moment, things could well get very bad again. >> reporter: how bad? consider a confrontation with iran that sends oil prices shooting up. the i.m.f. figures a big price spike would almost cut global economic growth in half. but the agency sees a more likely risk in the euro. markets are demanding immediate budget cuts to prove governments are serious about spending. but when they get them, investors fall into a funk. >> the markets appr somewhat sczophrenic,skinfor scal consolidation, but reacting adversely when consolidation
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leads to lower growth. >> reporter: add it all up and the world economy is expected to grow a modest 3.5% this year, and 4% next year. still, that's better than the u.s. economy, which is trucking along at 2.1% this year and 2.4% next year. europe is the trouble spot. the i.m.f. predicts a mild european recession this year will lead to sluggish recovery next year. but some analysts believe the seeds of long-term reform and growth have now been planted. >> there is this element of short-term pain and long-term gain in the european case, and unless you keep both things in perspective, i think you're being too negative on the european outlook. >> reporter: in europe, governments not being able to pay their debts is no longer the sole focus. growth is now on the agenda. >> if you don't have economic growth, getting out of a big debt situation in any country is very difficult. so, absolutely, i think there needs to be a focus on a resumption of growth. >> reporter: but strong growth
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around the world still looks like it's a few years away. darren gersh, "nigly bines repo," wasngton. >> susie: how should investors factor this new information? joining us now, john ameriks, head of investment counseling and research at vanguard. hi, john. welcome to "nightly business report." >> thanks. it's great to be here. >> susie: well, you know, a lot of people are wondering whether they should be investing only in u.s. companies or a combination with international companies. make a case for a global portfolio? >> well, we have always believed that having a globally diversified portfolios an important part of a successful tragedy for any long term investor. listening to the imf growth forecast story elevated up a little bit from where they were. good news coming from overseas. the diversification ties in well with the other stories that you are leading well tonight. people talk about apple a lot and what's going on with their
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products, will they be able to to have the next great hit. one of apple's competitor, samsung is not domiciled here in the u.s. and it's outside the u.s., you are looking to hedge ur ts, you are going to need to have that exposure. you need diversification. >> susie: a lot of investors think if i invest in a multinational u.s.-based company like general motors or mcdonald's or ibm, that i'm kind of covered because they do a lot of business globally, what do you say to that? >> yeah, no. that's a great point. more and more companies around the world are operating globally, but you know, also tying back into the story, the u.s. economicpy right now is sort of leading and a very good news story leading in information technology, computer, software, all of those kinds of industries. but in other industries, we're really not the major player in terms of the global sectors. so, those are more old-line industries. you can think of mining or even automotive parts. a lot of those firms are located outside of the u.s. so, if you are looking to get a diversified exposure to all
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sectors and segments of the economy, you are going to need to hold a globally diversified portfolio. >> susie: right. >> just having the u.s. really does limit your exposure in some ways. >> susie: let's talk about geographies because we hear about the financial problems in europe. we see headlines about the economy slowing chi and brazil are the countries that are good to go after as an investor and the ones to avoid? >> well, again, when we look at it, we're going to take a look at a broadly diversified global portfolio and just tell investors to remember that in the markets, you're generally getting paid for risks. and you know, while all of these different places have different risk elements to them, a long term investor should expect to see some kind of compensation for bearing that. in the emerging markets, the risks are around the rate of growth and sort of the political risks. in the european markets maybe the risks are more that th rate of growth might slow but investors in those markets see that, and they're going to price those securities proportionately, and as long as you're willing to take that risk, you should get that
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globalally. >> susie: all right. we're going to have to leave it there, john, thank you so much. >> thanks for having me. >> susie: and we are speaking with john ameriks, head of investment counseling and research at vanguard. >> susie: republicans claim president obama hasn't done enough to counter sky-high gas prices. today, the president struck back, calling for a crackdown on oil market manipulation. he wants to boost the minimum amount of money traders can put behind a position, increase the number of people who watch the energy markets and enforce the rules, and impose tougher penalties for rule breakers. the president admitted, the proposed rules alone won't bring pump prices down, buhe says ey will he protect csume fromarket volatility. >>e cat afrd a situation where speculators artificially
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manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher, only to flip the oil for a quick profit. we can't afford a situation where some speculators can reap millions while millions of american families get the short end of the stick. >> susie: also today, the president touted his plan to increase investment in alternative domestic energy sources, like biofuels, natural gas, solar and wind energy. john kilduff is a long time energy trader. he's founder of again capital. with us tonight from the nasdaq. john, it's always nice to see you again. what's the difference between speculation and manipulation in the oil markets? >> i think speculation really is by definition taking a view on where you think crude oil prices or gasoline prices or corn prices are going to go. and you put your money down and make that wager, basically.
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whereas manipulation occurs when you say -- hold back purposely electricity into california like was done in enron. when you have traders that lie about prices in certain markets to manipulate what posted prices are, or try to corner a market the way the hunts did way back in the day in the gold market. >> tom: and silver market in the '70s. oil has been over $100 a barrel since february which is traditionally not a sigh season for demand. is the market being manipulated here, kilduff? >> no, no. unfortunately, it's not. i know this is hard for folks. i ha always said this is a make or break f the economy. it's the pump price and it's in your face as you try to get to work every day. we don't make enough here in the united states to be energy independent. we never will. and we're in this together with the rest of the world, and oil markets, oil producing countries are in constant tumult, under threat, revolution, you name it. >> tom: mm-hmm had. >> not to mention the rising
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demand equation from china and the other countries that have these markets constantly in a tight position over the past several years in particular. >> tom: but is it truly in a tight position, there aren't any gasoline supply lines. you know, we're not waiting in line at a gas station like we saw in the 1970s. demand, actually has been flat to slightly down in the united states while supply has been plentiful for america. so, again, you know, to the president's point, is it overwrought speculators trying to twist the market? >> i would say no, while those factors are all correct, in the rest of the world, demand is only going up, it's skyrocketing in the years that i have been doing this, china has gone from a net exporter of crude oil to the number two importer of crude oil ahead of japan behind us. and certainly, theyre maintaining a trajectory that's almost unsustainable. we just went through the arab spring weaned all sit here every day now really wondering what's going to happen with the iran crisis. i will admit it seems like it's the saga du jour, but it points out that these oil supplies are
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under constant threat of interruption and disruption which is why these prices stay maybe higher than we would otherwise think they should. >> tom: well, and to be fair, this is not the first time a president has called for an investigation into speculation of the energy market, not the first me a democrat or a republican has called for it. what's you--eal quick, your end of summer price forecast for oil? >> i would still expect these prices to fall throughout the summer. national average gets below $3.50 to $3.25 a gallon by labor day. i will say, though, one of the other factors consumers are up against is the u.s. refining industry which is really going through a scale-back not unlike what happened in the airline industry. it's remarkable. we'r we're drawing down an gasoline inventorially at a time they should be building. >> tom: all right. we have to keep it and leave it there, john kilduff with energy markets john is with again capital.
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>> susie: a surprisingly big drop in march housing starts is raising worries about one of the economy's weakest sectors. starts slipped nearly 6% to 654,000 units. that's their lowest level in five months. but as erika miller reports, that doesn't necessarily mean homebuilding is on a shaky foundation. >> reporter: weather often gets blamed for fluctuations in housing starts. and it's possible a mild winter encouraged some homebuilders to start projects ahead of schedule, but not necessarily. economist jonathan basile points out the decline in starts was driven almost entirely by a nearly 20% decline in multi- family homes. >> there's been a lot of volatility in the multi-family category, which can create big, wild moves from one month to the next. and when you look, that was the area of all the weakness, really >> reporter: and there's reason
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to believe there could be a sharp reversal next month. permits for future construction rose 4.5% to their highest level in three and a half years. what's more, the increase was entirely due to gains in permits for multifamily homes. that's where the momentum has been concentrated this housing recovery. >> it looks like it has to do with the fact that more people are moving to renting and away from owning. it's become more difficult to buy a home. >> reporter: so, clearly, mixed messages on the housing front toy. but overall, the sector seems to be improving, and many economists think homebuilding will help economic growth this year for the first time since 2005. erika miller, "nightly business report," new york. >> susie: the oracle of omaha out with a bombshell this afternoon. berkshire hathaway c.e.o. warren buffett telling shareholders he has stage-one prostate cancer. but buffett said, "i've been told by my doctors that my
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condition is not remotely life- threatening or even debilitating in a meaningful way." the billionaire investor says he was diagnosed last wednesday, and underwent further testing over the past couple of days. he plans to work while receiving radiation this summer, but says treatment will limit his travel plans, keeping him in omaha. joining us now on the phone, robert hagstrom, portfolio manager at legg mason and an author of several best-selling books about warren buffett. hi, rbt. >> susie, how you are? >> susie: so, first of all, what was your take on this news? >> i this i like all of us who read the letter this afternoon, i think the first sentence in the letter kind of took our breathaway, just we just saw prostate cancer, but the second sentence, i think, gave us, you know, encouragement and calmed our nerves because like you said, it's not life threatening. it doesn't seem to be debilitating in any meaningful way, which is the quote from the letter. >> right. now, warren buffet has always been kind of vague about succession plans, who is going to take over from him as ceo.
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do you think now because of this latest news that he will be out with some more details? >> i don't think so, susie. know there is a game who is going to be the nxt ceo of berkshire hathaway that the board of directors has. i don't think the policy that he has about disclosure will change because of this. >> susie: what about the stock? looking at it over the last year or so, it has been in the trading range of $120,000 for berkshire hathi a way a shares. what do you think is going to happen to the stock going forward? >> i wouldn't be surprised if there was a hiccup in the morning. you have to expect something like that, susie, you about i would be shocked if the stock was off meaningful by the end of the day. >> susie: all right. robert, thank you so much. robert hagstrom joining us on the phone from legg mason. >> tom: berkshire hathaway shares were under pressure in after-hours trading, falling about 1% immediately after the news. tom, most important in that
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letter from buffett today was that he says he feels great, and that he will let shareholders know immediately if his health situation changes. certainly, that's going to be a one of the big questions at the berkshire hathaway annual meeting op may 5th. "nightly business report" will be there covering it and i'll have an interview with warren buffet and we'll have more of this in a few more weeks. >> tom: it will be interesting to hear what he says to say to you and the shareholders. that's coming up in the first week of may. the market rally got its groove back, at least for today, with broad-based stock buying. the s&p 500 was up from the opening bell, and continued climbing through the afternoon, ending higher by 1.5%. today's buying puts the index just above last week's high. with apple on the upswing, the technology sector led the charges, up more than 2%. the energy and industria sectors were up more than 1.5% each. in europe, spain sold more government bonds than expected, a sign of confidence by investors.
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that helped improve the mood of the market, as did a positive earning report from global beverage giant coke. coca-cola's first quarter came in two cents ahead of estimates. even european sales volumes were up for coke. the news sent coke shares up 2%, rising to their highest price in more than a decade. two big tech stocks in theow industals mahelpet the toneomorw. ibm shares were up more than 2% before its earnings after the close tonight. but with its revenues coming up short, the stock was down 2% in after-hours action. meantime, intel barely moved during the regular session and fell almost 3% after the close, despite better than expected earnings. while apple shares rebounded big today, it was solar panel maker first solar that was the biggest percentage gainer among tech stocks. the stock has been volatile as global solar panel prices have been declining. but today, shares mped more than 10%. the compy announced a 30% cut to its workforce and plans to
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cut its production. just last week, the stock hit new record lows. on thursday, bank of america will be in focus with its latest quarterly earnings. and raising capital. b-of-a has been selling assets and raising capital. today, reports surfaced it may sell its international wealth management business. shares were up 1.5%. reuters reports the bank is looking for a deal around $3 billion for that business. over the past couple of years, bank of america has been shedding certain operations, inuding reign edit car businesses. the bank earnings in focus today was goldman sachs. the investment bank easily beat wall street expectations. its financial advisory and stock trading businesses showed growth from a year ago. goldman also pared back how much risk its taking. but shares were not rising with the broad market. they closed down three-quarters of 1%. the bank did agree to increase its dividend for the first time in six years. whirlpool didn't get caught up in the buying, either. the appliance maker received a
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setback from the u.s. international trade commission. the group decided not to impose import tariffs on refrigerats from sou korea and mexico. irlpool clmethe foreign idgewere dpein the u.s. at below-market prices. the loss sent shares swirling, down more than 4%. whirlpool is at its lowest price since february. and that's tonight's "market focus." >> susie: in an industry known for big ideas, big paydays and big egos, facebook's recent $1 billion purchase of instagram was a big surprise. after all, instagram's photo- sharing app may be very popular, but the company has no revenue. as harry lin explains in tonight's commentary, it's all about magic. he's executive in residence at idea lab. >> even by the outrageously out- sized standards of the
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technology venture world, last week's news that facebook is acquiring instagram for a billion dollars was seismic. instagram is a two-year-old company with a dozenmployees in san francisco. a billiodolls! at my company, idealab, we're a technology incubator, so we talk all the time about what makes a startup successful. what makes an instagram an "insta-hit!" besides being dead-simple to use, instagram does something that many technology hits do-- it does magic. instagram takes your crappy mobile-phone pictures and makes them artful, instantly nostalgic, and something you want to share. of course, it's not magic, but to instagram users, it feels like magic. while imagining magic is easy if you're cative, designing and budingagics nearly impossible the realities of the human- machine interface often grind down our flights of fancy and we end up with, oh, powerpoint. but hats off to those designers and engineers still trying to conjure up magic. i'm harry lin.
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>> susie: it's equal pay day, an anti-holiday created by the national committee on pay equity. it marks the fact that women and men still don't earn equal pay for equal work. women working full-time jobs still earn just 77 cents for every dollar m make, according the arican asciation university women. and that pay gap adds up-- men working full time, on average, earned $47,700, while women working full time earned on average just under $37,000. speaking of the gender gap, tomorrow, we'll look at who was hurt most by the recession when it comes to jobs lost, men or women. also tomorrow, these women are making technology work for them. they're building a new app designed to put legal advice in your hand. >> susie: that's "nightly business report" for tuesday, april 17. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone.
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we hope to see all of you again tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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